Sustainable Development

Public/Private Partnerships: Government-Sanction Monopolies

By —— Bio and Archives--May 20, 2008

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During the first years of the Clinton Administration in the early 1990s, there was much fanfare about a new policy to “reinvent government.” It was sold as a way to make government more efficient and less costly. It would, said its proponents, “bring business technologies to public service.”

Pro-business, anti-big government conservatives were intrigued. The backbone of the plan was a call for “public/private partnerships” (PPPs). That sounded like their kind of program. Government, they said, would finally tap the tremendous power of the entrepreneurial process and the force of the free market into making government more effective and efficient. It sounded so revolutionary and so American.

Today that “reinvention” has evolved into the policy known as Sustainable Development and much of it has been embraced by the “free-trade” movement which advocates open borders, free trade zones and one-size fits all regulations and currencies and the use of public/private partnerships. Many of the biggest proponents of the policy are conservative and libertarian think tanks.

The North American Free Trade Agreement (NAFTA) was the first of the “free trade” policies to use the concept of public/private partnerships as a major tool to drive policy. The program was sold simply as a means to expand markets for American industry and agriculture beyond U.S. borders into Canada and Mexico, thereby offering American business and workers “better jobs, better wages and more exports.” However, NAFTA has brought about much more than unencumbered trade. It is creating great change in the economic order of the nation.

NAFTA comes with its own tribunal overseers; its own courts; and its own set of rules—all of which can, in fact, override laws passed by local, state and federal government. Such a policy is not “free trade,” rather it is a new government structure – reinvented, indeed. Here is how Henry Kissinger described NAFTA in July, 1993: “It will represent the most creative step toward a new world order taken by any group of countries since the end of the Cold War, and the first step toward an even larger vision of a free-trade zone for the entire Western Hemisphere. [NAFTA] is not a conventional trade agreement, but the architecture of a new international system.”

NAFTA, under close examination seems to be little more than a redistribution of the wealth scheme. Profiting from it are a few selected corporations which get wealthy in their elite partnerships with government while American jobs, industry and wealth get redistributed to third world nations. Since 1994, under NAFTA, the U.S. trade deficit has soared and now approaches $1 trillion per year. The U.S. has lost some 1.5 million jobs and real wages in the U.S. have fallen significantly.

However, the concept continues to be highly touted by “free traders” as a success. Thirteen years after its inception there are now more calls for similar programs to cover South America, Central America, Africa and Asia. The Security and Prosperity Partnership (SPP) is designed to further enhance and strengthen the NAFTA concept over North America.

It is little understood by the general public how public/private partnerships can be used, not as a way to diminish the size of government, but in fact, to increase its power. These bonds between government and private international corporations are a double—edged sword. They come armed with government’s power to tax, enforce policy or enforce eminent domain. At the same time, the private corporations use their wealth and extensive advertising budgets to entrench the policy into our national conscience.

PPPs can be used by international corporations to get a leg up on their competition by entering into contracts with government to obtain favors such as tax breaks and store locations not available to their competition, thereby creating an elite class of connected businesses.

A private developer which has entered into a PPP with local government, for example, can now obtain the power of eminent domain to build on land not open to its competitors. The government gains the higher taxes created by the new development. The only ones to lose are the property owners. Using PPPs, power companies can obtain rights of way over private land. Private companies can obtain control of the nation’s highway system or local community water supplies.

Of course, it’s not just American companies entering into PPPs with governments. Foreign companies are being met with open arms by local, state and federal officials who see a way to use private corporations to fund projects. As the Associated Press reported July 15, 2006, “On a single day in June (2006) an Australian-Spanish partnership paid $3.6 billion to lease the Indiana Toll Road. An Australian company bought a 99 year lease on Virginia’s Pocahontas Parkway, and Texas officials decided to let a Spanish-American partnership build and run a toll road from Austin to Seguin for 50 years.”

In fact, that Spanish-American partnership in Texas is a company called Cintra and its lease with the Texas Department of Transportation to build and run the Trans Texas Corridor contains a “no-compete” clause which prohibits anyone, including the Texas government from building new highways or expanding exiting ones which might run in competition with the TCC. That is not free enterprise.

With inside information from its PPP, Kansas City Southern Railroad (KCSR) has been able to grow overnight from a two bit belt around Kansas City to controlling a 2,600-mile artery from Lazaro Cardenas to Kansas City, straight up the Trans Texas Corridor. KCSR has obtained the exclusive rail rights up the corridor. It is now a government-sanctioned monopoly. That is not free enterprise.

At an April, 2007 meeting in Calgary, Canada, as part of the Security and Prosperity Partnership, government officials, business leaders and academics met to discuss redistributing Canada’s water to Mexico and the U.S. Southwest. Canada has water, lots of it, and the public/private partnerships of the SPP are swarming on it like locusts as they seek to drain it out of Canada’s rivers and lakes and ship it to potential profit centers in the south. The Trans Texas Corridor will provide water pipelines for the shipping and PPPs will buy up the rights and dispose of the water as they see fit. Canadians are suddenly feeling the raw power of the lethal combination of government and private industry as they dictate policy. The people of Canada now understand that they will have little say in the matter.

PPPs are one of the reasons many people find they can no longer fight city hall. The private companies gain the power of government to do as they please – and the governments earn the independence of the companies no longer needing to answer to voters. It’s the perfect partnership. Such a process allows the private companies to be little more than government-sanctioned monopolies, answerable to no one. Their power is awesome and near absolute. Some call such policy corporatism. Another term would be corporate fascism.

What public/private partnerships are not, however, is capitalism or free enterprise, though it may have some of the trappings of such. The marketplace is still there. Its laws have not been repealed. But ultimately, corporatism does not trust the marketplace to do what the elites want. Thus the alignment of corporations and government is done at the expense of ordinary people – the exact opposite of free markets controlled by consumers

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Tom Deweese -- Bio and Archives | Comments

Tom Deweese the publisher/editor of The DeWeese Report and is the President of the American Policy Center, a grassroots, activist think tank headquartered in Warrenton, Virginia.

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